Shriram Transport Finance Company’s (STFC’s) new equipment finance subsidiary, Shriram Equipment Finance Company, will start operations from September 1, 2010, with an initial capital of Rs 50 crore. The new company’s promoter said the company would be listed and partners, including private equity, would come on board.
Speaking to Business Standard on the sidelines of the company’s 31st annual general meeting here today, STFC Managing Director R Sridhar said STFC’s assets under management (AUM) were to the tune of around Rs 30,000 crore, of which seven-eight per cent was contributed by the equipment business, which was a division in STFC.
According to market sources, the new equipment finance segment is estimated around Rs 10,000 crore. “We see good potential in this space to tap the market and have decided to focus on scale. Thus, the new company has been floated,” said Sridhar.
The company would not only focus on new equipment finance but also used equipment finance. It would also focus on middle and lower segments, that is, small-time contractors, said Sridhar.
“Our target for the new company is Rs 6,000 crore AUM by the end of March 31, 2013,” said Sridhar.
The initial capital of Rs 50 crore will be infused by STFC and going forward the company will raise money through debt for both lending and capital requirements. “We will also list the company and rope in partners, which can be private equity players,” said Sridhar. He did not give any time-frame for this.
Sridhar said GE had earlier shown an interest in taking 20 per cent but pulled out due to the financial crisis. “Going forward, we will certainly look for partners, possibly a PE partner also,” he added.
